SME Crowdlending explained by Myriam Reinle

By the end of the 90s and the early 2000s, the Peer to Peer model just started to emerge on the internet. At that time Myriam just began her career in Switzerland in the marketing department of UBS. After five years in this corporate environment, she decided to do a clear cut and move on to the digital area. More specifically, in the marketing department of Tamedia. After ten years she moved on to become the CEO of Lendico (Schweiz) AG. Myriam is currently (December 2019) engaging in pursuing her career within the sphere of the blockchain and therefore is following a strategic course on this subject.

I am glad to interview Myriam for our crowdlending podcast. During our interview, Myriam described some advantages of this particular asset class, gave some advice to new investors in crowdlending and discussed the future of this industry.

In the following part, I summarize the main points from our conversation. You can find the episode in this link.

Why SMEs crowdlending?

Initially, the strategy of Post Finance and Lendico group was to focus on SME. Although they did not exclude the consumer or real estate side, it was certainly not the focus of the first years. In fact, some people who started Lendico, first experienced consumer or real estate loans. But then, after one or two years, they had to stop and keep the focus on SMEs.

It is also an attractive investment to do since there is a very low correlation to capital markets, and it allows investing in the real economy, which is great for diversification.

Any advice to new private investors?

We always advise to diversify the portfolio and therefore, the risk. That is the principal advice we give to our investors.

Besides diversification, new investors should compare the platforms. Indeed, offers seem similar. However, there are several points an investor should look at. For instance, the securitization of the loan. Because the level of risk is different if the loan is backed by collateral.

Further, the type of contract can also differ among platforms. It can be a peer to peer agreement or a contract with a platform in between. Concerning the interest rate, it might be a fixed defined interest rate or determined via an auction. Lastly, fees might vary from platform to platform.

How could we bring the crowdlending industry to the spotlight?

We should try to work with fiduciaries and explain to them the advantages of this new type of alternative financing. Cooperating with other platforms can certainly help to spread the word and to develop the topic.

What’s next for the crowdlending industry?

It is more a combination of small steps rather than one big revolution.

Since institutions can finance more projects in a faster way, it implies that the product must be set up and standardized for them. In the meantime, every SME is different, therefore a lot of resources are needed for the credit assessment.

This brings us to the next emerging trend in the crowdlending industry: automation and machine learning. It should be optimized as much as possible because it’s a volume business.

However, overall, the most important thing is education. The topic is “too unknown”, and there is a lot of communication to be done. Crowdlending players should make an effort in this sense.

Listen to the full exchange with Myriam, and stay tuned for the next episode!

Do you speak crowdlending?

This podcast is covering the Crowdlending industry. Our mission is to provide you with all the insights from this market and help you make informed decisions. I’m delighted to host this podcast and hopefully bring value to all our listeners.

This podcast is available at Spotify, Itunes, Sticher, and Soundcloud.